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Small city's police chief to collect salary, pension of $170,000

OLYMPIA, Wash. (AP) - A small city facing a massive financial penalty for how it hired a fire chief out of retirement has found a legal way to hire a new police chief that allows him to draw a salary and pension payments at the same time.

DuPont officials announced recently that Robert Sheehan had been selected to lead the police force. City leaders and the Department of Retirement Systems talked for weeks about how to shape the job's details so that Sheehan's retirement benefits would not be affected, according to emails.

DuPont Mayor Michael Grayum said the city was looking for someone with a long history in law enforcement. Of the four finalists for the job, three were retirees, he said.

"That leadership and that experience is absolutely invaluable," Grayum said. Given the problems the city had with its fire chief, he said he wanted approval from the retirement system before proceeding with the hire.

After several back-and-forth discussions, officials eventually determined that Sheehan could be hired on a part-time basis - 35 hours-a-week instead of 40 - and that he could then earn both a salary and a pension that he accrued for years working at the Tacoma Police Department. Sheehan's annual pension is worth more than $90,000 per year, according to records obtained by The Associated Press under state public records laws. He will earn $82,000 a year in his new job, bringing his total annual compensation to over $170,000.

Typically, law enforcement and firefighter retirees who return to similar jobs would have their pension benefits suspended.

Law enforcement and firefighter retirees have different rules than most other retirees in the state. While retirees such as Sheehan could conceivably work in a similar position for 1,800 hours a year without disrupting their pension benefits, other workers like teachers are capped at less than half that number - 867 hours.

Republican Sen. Barbara Bailey said those return-to-work rules were designed to limit retire-rehire cases while allowing school districts to use retirees as substitute teachers or on a temporary basis. She said lawmakers need to examine whether they should place new restrictions on retire-rehire scenarios.

"We're going to have to go back and look at this in a broader scope," Bailey said.

DuPont officials ran into problems earlier this year when an AP investigation highlighted the case of Greg Hull, who was then the fire chief in DuPont. After retiring from a nearby fire department, Hull was hired in DuPont as a contractor, allowing him to earn both salary and pension benefits that totaled more than $300,000 per year.

State retirement officials responded to the AP story by conducting an audit in DuPont and concluding that Hull was improperly classified as a contractor. State officials are now seeking to recover more than $550,000 in excess pension payments from the city.

Sheehan's case suggests that Hull's payments could have continued if he had been hired at 35 hours a week. Hull and Sheehan are in different pension plans - LEOFF 1 and LEOFF 2, respectively - but officials say the rules surrounding part-time rehires is similar.

Dave Nelsen, the legal and legislative services manager at the Department of Retirement Systems, said he is aware of a few other cases around the state in which LEOFF retirees have come back to similar jobs on a part-time basis without disrupting pensions. He said the department simply focuses on working with employers to help them understand what the law allows.

"Whether it's right or wrong, that's a policy decision that policymakers can make," Nelsen said.